Correlation Between SOUTHERN and Entegris

Can any of the company-specific risk be diversified away by investing in both SOUTHERN and Entegris at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SOUTHERN and Entegris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOUTHERN PER CORP and Entegris, you can compare the effects of market volatilities on SOUTHERN and Entegris and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SOUTHERN with a short position of Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHERN and Entegris.

Diversification Opportunities for SOUTHERN and Entegris

0.33

Correlation Coefficient

SOUTHERN  Entegris

Weak diversification

The 3 months correlation between SOUTHERN and Entegris is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER CORP and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris and SOUTHERN is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SOUTHERN PER CORP are associated (or correlated) with Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of SOUTHERN i.e., SOUTHERN and Entegris go up and down completely randomly.

Pair Corralation between SOUTHERN and Entegris

Assuming the 90 days trading horizon SOUTHERN PER CORP is expected to generate 0.16 times more return on investment than Entegris. However, SOUTHERN PER CORP is 6.12 times less risky than Entegris. It trades about -0.26 of its potential returns per unit of risk. Entegris is currently generating about -0.16 per unit of risk. If you would invest  9,970  in SOUTHERN PER CORP on October 4, 2024 and sell it today you would lose (201.00) from holding SOUTHERN PER CORP or give up 2.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Entegris

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SOUTHERN and Entegris

The main advantage of trading using opposite SOUTHERN and Entegris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHERN position performs unexpectedly, Entegris can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Entegris will offset losses from the drop in Entegris' long position.

The idea behind SOUTHERN PER CORP and Entegris pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.